First, of course lacking a HDD is a disadvantage. That's why you charge less. Your whole post just sets up a straw man. No one is saying that not having a HDD is a better product. But the whole point is that not every consumer on earth wants to connect to Live and go through the Marketplace and use XBLA. Some just want it to play games and that's all. Look at the sales of the PS2 right now for your proof. For those people, a HDD-less SKU is ideal. It's all about targeting a different segments and giving them an attractive, cheap option.How is this a good thing? He's talking as if the fact that the Core 360 doesn't have a HDD is great for the consumer when it definitely isn't..
This lack of HDD was the biggest mistake that MS made on the Xbox360 and the sole reason why the 50MB download limit on XBLA will probably never get lifted.. (I remember them saying something about allowing none HDD owners to play the games from the memory cards..)
Also pretty much the majority of the Xbox360's pulling points for the consumer (downloadable games, movies, videos, music, episodic content, extra game content etc etc..) are a based around a system which requires the user to download something to some kind storage media.. I don't see how the lack of a mass storage (meaning you swapping around several small-sized memory cards which are so bloody expensive NEways, that for the price of 3 you might as well buy a friggin' HDD..!) makes the customer's life any better nor offers any kind of benefit over the alternative..
In the end it as to save money for them (ms) and no amount of PR bull will convince us (consumers) otherwise..
Well.. Maybe some i guess..
Second, has been said many, many times before (and in the article, and quoted in the OP), the advantage of the HDD-less SKU will be realized later in the lifecycle when 360 is able to hit $150 or less. The PS3 is going to have a ridiculous amount of trouble hitting that pricepoint without taking a big loss. Again, this has been enumerated many times before, but HDD don't get cheaper, they just get bigger. Silicon (e.g. chips) can be cost-reduced to almost nothing, but the smallest HDD on the market will always cost at least $30.
Third, the 50 MB limit is already going to be broken very soon. Plus, I think it's pretty obvious MS will raise the limit permanently once larger memory cards are released. So that's a pretty moot point, as well.